Our Investment Philosophy

We strongly believe in the power of real assets when investing for the medium-term or long-term. Studies such as those performed by William Bernstein, author of ‘The Four Pillars of Investing’, show that from year 1901 to year 2000 stocks rose by an average of 6.45% p.a. after inflation, whilst bonds returned an average of 1.57% p.a. after inflation.

Another in-depth study called the ‘Sandler Review: Medium and Long-Term Retail Savings in the UK July 2002’ revealed that “the asset allocation decision is by far the most important factor in determining long-term returns.” For this reason we always aim to achieve an asset allocation that will provide the best potential for growth within the agreed level of volatility. We also strongly recommend that portfolios are reviewed at least annually. This is to ensure that their asset allocation remains suitable for them, and it also enables them to benefit from our latest research.

We always consider our clients’ likely future cash needs, and their desire for a ‘comfortable’ cash reserve, before making an investment. In some cases this may be a few thousand pounds, whilst in other cases it may be several hundred thousand pounds. We appreciate the concept of Behavioural Finance, in particular that many clients feel more strongly about losing money than about making it. We understand that our clients’ ability to ‘sleep comfortably at night’ is often more important than obtaining the maximum return on their assets.

Whilst we recognise that many fund managers fail to outperform their market sectors, we still believe that good fund managers tend to avoid the worst extremes of the market and can add real value to returns, especially at times of economic change. We tend to recommend fund managers who have long track records of outperforming their sectors, and whilst fund managers of such high calibre can be hard to find, they do exist. We aim to meet as many of these fund managers as possible, to listen to their views and to question them on any specific points of concern. We believe that our direct access to fund managers and their researchers puts us in a particularly strong position to assess whether their funds are right for our clients.

We select suitable investments for our clients ‘in-house’, using the services of a specialist fund research company. Our clients place great trust in us, and we therefore prefer to take responsibility for both asset allocation and fund selection. This way, we are directly accountable to our clients if things go wrong. It also ensures that we remain close to our clients’ needs and can make very specific alterations to their portfolios, rapidly where necessary, following review meetings and other discussions.